Findings say school imposed ‘significant restraints’ on state auditors; cadets denied due process

By RON AIKEN

A 92-page report issued earlier this month by the Legislative Audit Council (LAC) revealed a culture of secrecy, uneven applications of due process and multiple violations of the Freedom of Information Act and state procurement law at The Citadel, including school officials impeding auditors in their duties, refusing to turn over financial records and allegedly conducting public business in private without legal notice.

The LAC is mandated by state law to conduct regular audits of state agencies, programs and institutions receiving public money. The purpose of the LAC, according to its website, is to “assist the General Assembly and the public in determining whether state agencies are efficiently, effectively, and lawfully managing public resources, and whether agency programs are meeting their intended objectives.”

The LAC normally issues full reports of its audits of agencies either scheduled for review or those, in the case of The Citadel, where members of the General Assembly have specifically requested one. In The Citadel’s case, the LAC termed its report “A Limited Review” in part because, the executive summary reads, “Generally accepted standards require us to report significant constraint imposed upon the audit approach that limit our ability to address audit objectives,” the statement read.

“One of our primary objectives was to review the cadet disciplinary process, including appeals, what role the Board of Visitors (BOV) and the President play in discipline, and if the process is fair and equitable. During our fieldwork, an expulsion appeal was presented to the Board of Visitors. We were not allowed to observe the cadet’s or the college’s presentation to the BOV regarding the case, nor were we allowed to observe deliberations by the Board.”

“S.C. Code Sect. 2-15-61 gives us access to all records and facilities of an agency under review,” the report reads. “Even though we have the authority to attend any and all executive sessions of boards or commissions under review, we agreed to excuse ourselves in specific instances where legal advice was given from the college’s General Counsel to the BOV.

“For all executive sessions, the college stated that the BOV was receiving legal advice throughout the executive session even though the agenda did not state that legal advice was part of the executive session and it was clear that other information had been discussed based on conversations after executive session was closed.

“Since the college blocked our observations of executive sessions of the BOV, our ability to effectively review the BOV’s involvement in running the college was hindered.”

The same BOV also violated the Freedom of Information Act while under review, the report alleges.

Besides not always including a FOIA compliance statement in the meeting minutes, “on at least one occasion, the Board members met at a private, membership-only club (the Carolina Yacht Club). There was a quorum of the Board, but the event was not open to the public.”

DUE PROCESS QUESTIONED

The LAC’s review of cadet disciplinary actions over a five-year period revealed uneven standards that raised significant questions of fairness.

Lt. Gen. John Rosa (Ret.), president of The Citadel.

“We found that cases involving the same disciplinary offense were sometimes heard in different venues (Class I hearing before a single hearing officer versus Commandant’s board with three members), a practice for which we could not identify any rationale,” the report reads.

“The issue of having two venues in which a case can be adjudicated has been raised in a cadet appeal. In that case, the lack of a cadet’s opportunity to have the case heard before a Commandant’s board instead of a Class I hearing was the first cited example of alleged due process violations in the appeal.”

When a cadet appealed a disciplinary action during the audit period, the Citadel’s refused, in spite of state law, to allow auditors to witness the appeal process, one legislators specifically had sought more information regarding the role of the BOV in appeals since no other university board in the state plays a role in student discipline.

“Prior to the (disciplinary) hearing, we received notice from the college’s outside counsel letting us know that the cadet’s attorney had requested that the entire appeal hearing (emphasis theirs) be closed,” the report reads. “We were subsequently told that the college’s in-house General Counsel had called the cadet’s attorney and told him that they should invoke FERPA (Family Educational Rights and Privacy Act) rights to keep us out of the hearing, and implied that the media may be present if the hearing were open.

“We were also told it was the college’s decision, rather than the cadet’s, to prevent us from attending.”

To redress the auditor’s grievance, the LAC recommended that the General Assembly should amend existing state law “to clarify that the Legislative Audit Council has access to executive sessions of governing bodies (boards, commissions, etc.) of state agencies and that we may not be prevented from attending for any reason.”

As for the BOV’s role in appeals in general, the LAC recommendation was even more clear.

“The Board should not be involved in disciplinary appeals,” the statement reads. “No other governing board of a public university of four-year college in South Carolina hears appeals of student conduct or disciplinary matters, and the governing boards of the five other senior military colleges in the country do not hear cadet disciplinary appeals.”

The audit also noted failures by the BOV to post 24-hour public notice of meetings and questioned its use of the term “emergency meetings” when the situations it witnessed more precisely were simply “special meetings.” Emergency meetings do not require 24-hour public notice, while special meetings do.

“The Citadel should discontinue holding emergency Board of Visitor’s meetings if the subject matter for the meeting is not a true emergency,” the report recommended.

PROCUREMENT PROBLEMS

In several instances, auditors found The Citadel in violation of state procurement law, including:

a public-relations vendor was paid more than $170,000 in FY 2011-12 but the school provided no documentation that a competitive bidding process was used;

invoices were not paid in accordance with due dates, as required by the S.C. Consolidated Procurement Code;

The Citadel Foundation refusing to disclose its financial records to state auditors and purchasing goods and services for the school that circumvented procurement law, including funding either completely or in part permanent improvement projects at the college, which received $116.2 million in FY 2015-16 from sources including state and federal funding, The Citadel Trust, The Citadel Foundation and The Brigadier Foundation.

“The Citadel has not complied with S.C. Consolidated Procurement Code Title 121, Chapter 35, which governs the expenditures of all funds, regardless of the source, unless specifically exempted,” the report states.

State auditors also were stonewalled, they stated, when they requested the contract and payment details for a consulting firm whose proposal quoted fees of $495,000 for work over a six-week period.

“The vendor, a management consulting firm, was paid for services provided on behalf of the college, using the assistance of college staff; therefore, we should have been provided a copy of the contract and payment details,” the report reads. “We also question the use of a consulting firm when college employees may have been able to perform the work.”

The most-significant violations of state law alleged, however, related to The Citadel’s use of foundations for school expenditures.

“Purchases of goods and services were made by The Citadel Foundation on behalf of The Citadel, potentially violating a well-recognized principle of law than ‘an act which is forbidden to be done directly cannot be accomplished indirectly,'” adding that it “was unclear whether the maximum benefit from those funds received since the Foundation is not required to follow the S.C. Consolidated Procurement Code and competitive bids were not obtained.”

Specifically, The Citadel Foundation denied auditors a list of Foundation employees, positions and salaries; their incentive compensation plan; information regarding the school President’s compensation plan; copies of contracts and payments for a consulting contract; purchasing procedures for school lab equipment; and documentation related to the amount of money transferred to the college from 2015-2017.

INCOMPLETE ACCOUNTABILITY

The review also found fault with the school’s handling of its internal auditor, noting the position’s structure led to the possibility of undue interference being exerted over the position.

“Currently, the internal auditor reports to the Chief Compliance Officer, who reports to the Vice President of Finance,” the report notes. “This arrangement is not ideal since finance is a department that is subject to internal audits and management is involved with audit decisions. The internal auditing function is less effective due to this impaired independence.”

“Based on our review, the internal audit position is not free from influence. We found instances where the issuance of audit reports was delayed, audit report management responses were inappropriately modified, and monthly status reports were delayed by management.”

“The Citadel should have the internal auditor report directly to the chairman off the Board of Visitors in order to be under the appropriate authority and to maintain independence.”

Accountability also was found wanting, the report concluded, in the school’s hiring of outside counsel without approval from the Attorney General’s office and at rates “higher than state guidelines,” the report reads.

In a letter dated Oct. 13, Citadel president John Rosa objected to “a number of the LAC report’s findings and recommendations.”

The Citadel’s official response included support for its decision to prevent LAC auditors from witnessing an appeal hearing based on the cadet’s attorney claiming FGERPA rights; denied that LAC auditors had the right to attend executive sessions where legal advice was received (though it did not address LAC concerns that not all meetings it was excluded from contained such exchanges of information); and argued that the board meeting at the Carolina Yacht Club was a “social event,” and not a “meeting,” alleging that no business was discussed.

The response also stated that use of different venues for the same offenses was fair because it does so “in the interest of maintaining flexibility to and responsiveness for the cadets involved” and argued that The Citadel Foundation appropriately denied access to records and declined to provide written documents since it is not a governmental entity but that it “took strides to cooperate fully” with the audit.

The Citadel, established in 1842, is a public, four-year institution with approximately 2,300 members of the Corps of Cadets. It is one of six military colleges in the United States. The Citadel Graduate College has approximately 1,200 students. As of April 2017, the Citadel employed 1,041 (658 full-time and 383 part-time) faculty and staff. Its budget for FY 16-17 was $146,926,357, with $10,058,294 in state appropriations.

The Legislative Audit Council is composed of five public members, one of whom must be a practicing certified or licensed public accountant and one of whom must be an attorney. In addition, four members of the General Assembly serve ex officio. Audits by the Legislative Audit Council are conducted in accordance with generally accepted government auditing standards as set forth by the Comptroller General of the United States.